The ongoing weakness in the oil market made me examine again the recent developments in the oil market. Some analysts suggest the growing U.S. production is the driving force behind the fall in oil prices. But I still think that the two main factors that have driven down oil prices are the changes in the expected growth in the demand next year and the changes in Saudi Arabia’s strategy. So will oil remain at its current low levels?
OPEC and oil prices
The recent OPEC report showed there was a modest fall in its output to 30 million bbl per day – The lowest level in the past few months. Most of this drop in related to the 250 thousand bbl per day of oil production lost in Libya from the shut down of El Sharara field, which was producing 270,000 b/d amid renewed unrest.
Saudi Arabia, which may have been among the main reasons for the recent plunge in oil prices, didn’t increase its production in recent months. If anything, its output actually slid in the past couple of months.
The rest of this analysis is at Seeking Alpha
For more see: “On Crashing Oil Prices”